Credit, Collections & Insolvency News
Provident Financial customers can now claim compensation for mis-sold loans after the High Court backed a partial repayment scheme.
The company has set aside £50 million to meet claims from borrowers who were sold unaffordable loans. The Court agreed to the scheme despite the fact that customers will not get a full refund after the firm warned full payments would force it to go insolvent leaving many victims with nothing.
The scheme will go live later in August with a deadline of the end of February 2022, giving borrowers six months to claim their compensation.
Malcolm Le May, Chief Executive officer of Provident said “The Court has approved the sanctioning of CCD’s scheme, which is a positive outcome for CCD’s customers with valid claims under the scheme, as it provides access to a redress payment which would not have been possible had the scheme not been approved.”
“We believed from the outset that the scheme was fair and that it offered the best outcomes for customers.
“The Court sanction enables us to move forward with the scheme and we expect creditors will receive redress payments in the second half of 2022.
“As we have stated previously, the managed run-off of the CCD business is progressing well and we will provide the market with a further update as to how the Group is positioned for the remainder of 2021 and beyond with our interim results on 11th August 2021.”
The Financial Conduct Authority (FCA) through a statement said that it does not support the scheme for a number of reasons, including the key concern that consumers are being offered significantly less than the full amount of redress they are owed.
The FCA says that it shared its initial views with the Court at the convening hearing on 22nd April 2021. Provident subsequently made changes to its proposal, including deciding to wind down Provident Personal Credit Limited (PPC) meaning PPC will no longer continue in business.
Despite the FCA’s concerns with the scheme, the regulator was conscious that the only likely alternative to the scheme was the insolvency of PPC. In that scenario, consumers would likely receive no redress, which was an important factor in our decision not to formally oppose the scheme in court.